🏭 As copper prices continue to hit historic highs in global markets, Egypt is witnessing a dual impact: clear gains for major export-oriented manufacturers versus mounting pressure on the local market and the contracting supply chain.

The price surge isn’t hitting industries uniformly — it’s redistributing risks and profitability between those able to pass costs onto USD-denominated markets and those locked into rigid local contracts with limited margins, at a time when cables and electrical supplies have become among the most cost-sensitive components in infrastructure projects.

ICYMI: Copper prices on the London Metal Exchange had an exceptional 2025, touching USD 13k per ton last week — a 35-40% increase from the year’s start, when prices hovered around USD 8.7k to just under USD 9k per ton, according to LME data. In December alone, prices jumped more than 15% from November, the fastest monthly climb of the year.

What’s driving the surge? A mix of speculative momentum, trade tensions, and structural market pressures, analysts told the Financial Times. Copper posted its largest annual gain since 2009, driven by expectations of US tariffs on metal imports, prompting traders to accelerate shipments to the US before duties take effect. This drained global inventories and widened price differentials between LME and Comex.

Supply disruptions from unexpected shutdowns at several major mines, combined with delayed shipments, have heightened concerns about a medium-term structural deficit. Strong demand for copper — essential for the renewable energy transition, power grids, electric vehicles, and electronics — continues pressuring prices, though analysts believe elevated prices may eventually dampen demand in some markets, particularly given China’s industrial slowdown.

The record price increase is directly affecting engineering factories dependent on the local market given the absence of effective hedging tools to absorb price volatility, Mohamed El Mohandess, head of the Engineering Industries Chamber at the Federation of Egyptian Industries, told EnterpriseAM.

The increase’s impact doesn’t stop at the factory — it extends through the production chain to ultimately reach consumers, whether through higher product prices or reduced supply, El Mohandess explained. The Chamber has done its part in monitoring the situation and analyzing its market implications, but raw material pricing happens globally beyond local control, while domestic market regulation tools remain limited. “The crisis is no longer about diagnosis but about the absence of executable solutions,” he noted.

Deep cable manufacturing as first line of defense: Copper is the backbone of the cable industry, and manufacturers’ ability to survive depends not just on raw material prices but on success in deep manufacturing, raising local value-added, and managing supply and financing risks in a highly volatile global environment, Amr Al Sawaf, general manager of Elsewedy Cables previously told EnterpriseAM. Elsewedy Cables doesn’t bet on copper prices but on maximizing value-added through deep local manufacturing. Without significant domestic production of raw materials, the company is subject to daily sharp fluctuations in international commodity exchange prices, creating constant cost pressures, he added.

Elsewedy’s real investment lies in transforming copper from plates and coils into highly complex final industrial products for cables and infrastructure projects. This approach directly increases the local component ratio in the company’s products, averaging 40% and reaching up to 90% in some products by value — enhancing final product competitiveness despite complete reliance on imported raw materials, El Sawaf explained.

Export gains, domestic pressures: While major manufacturers have absorbed the copper price shock through exports and USD-market cost recovery, the greatest pressure has shifted to the local market — specifically to contractors working on government and infrastructure projects, analysts told EnterpriseAM. With rising global copper costs and increased financing and inventory expenses, local cable companies face tight margins when selling domestically, particularly given government contracts that don’t always include flexible price escalation clauses matching rapid input price surges.

Export figures paint a mixed picture: Egypt’s copper and copper products exports fell 9% y-o-y to USD 847 mn in the first 11 months of 2025, according to Building Material Export Council data. The council attributed the mixed performance to varying demand across key markets for different copper products, with some markets declining notably while others achieved good growth during the same period.

Engineering exports continued their positive performance in 2025, recording a strong November jump of 35.4% y-o-y to USD 621.3 mn. Exports for the first 11 months rose 13.9% y-o-y to USD 5.9 bn, driven by strong performance in machinery and equipment (+25%), electrical and electronic industries (+24%), automotive components (+22%), transportation (+13%), and home appliances (+12%), according to Engineering Industries Export Council data.

How is the contracting sector handling the cable price surge? Copper prices are testing contractor margins without stalling projects. The price increase creates localized pressure on the contracting sector through higher electrical supply costs, but it’s not halting execution — it’s being partially absorbed through hedging policies and declining prices for other materials, particularly steel and cement, Mohamed Sakr, vice president of Medkor General Contracting, and Walid Sweida, chairman of El Dawwa Engineering Consultancy told EnterpriseAM. Both expect the impact to remain confined to margin and timeline pressure, with projects continuing at a slower pace.

Cable projects are most sensitive to copper price fluctuations, with cost increases potentially reaching around 15%, while the impact remains much lower in other infrastructure projects, Sakr said. The extent of impact depends on project pricing and whether contracts accounted for raw material price volatility risks.

Rigid government contracts, volatile supplier market. Cable suppliers link their pricing to global copper and aluminum exchange prices, with price quotation validity rarely exceeding two months at best. Most government contracts, especially fixed-price contracts, don’t allow compensation for price differences resulting from raw material fluctuations — making contractors more exposed to absorbing part of the increase with their margins, particularly in pre-priced projects, Sakr noted.

The contracting sector is currently dealing with repeated cable price increases over short periods, shortened price quotation validity, and prioritization of export orders with USD price and faster payment terms, analysts say. This creates a growing gap between large projects with government or sovereign funding that can absorb increases and medium and small projects forced either to bear costs at the expense of profit margins or renegotiate execution schedules, market insiders say. In this context, copper becomes an indirect pressure factor on local project execution pace — not merely an expensive industrial input — especially if global prices remain at record levels and an increasing share of production capacity continues flowing to export markets.

What to watch this year: Industrial demand is expected to exceed mined supply by 2030, with prices remaining elevated in 2026, analysts say. Copper demand is growing due to the transition from fossil fuels to renewable energy sources like wind and solar, vehicle electrification, and the AI-driven data center construction boom. But older copper mines are becoming less productive, and building new ones has become extremely expensive and time consuming, often taking years.

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